Class 12 Micro Economics - Chapter Production and Costs NCERT Solutions | Why does the SMC curve cut the AVC curve

What is the total product of input?

Explain the relationship between the marginal products and the total product of an input. 

When does a production function satisfy decreasing returns to scale? 

The following table gives the total product schedule of labour. Find the corresponding average product and marginal product schedules of labour.

What is the law of diminishing marginal product? 

What do the long-run marginal cost and the average cost curves look like? 

What are the average fixed cost, average variable cost and average cost of a firm? How are they related? 

Briefly explain the concept of the cost function. 

What does the average fixed cost curve look like? Why does it look so? 

What is the law of variable proportions? 

What would be the shape of the demand curve so that the total revenue curve is?

(a) A positively sloped straight line passing through the origin?

(b) A horizontal line?

Explain market equilibrium.

Discuss the central problems of an economy.

What are the characteristics of a perfectly competitive market?

What do you mean by the budget set of a consumer?

From the schedule provided below calculate the total revenue, demand curve and the price elasticity of demand:

When do we say that there is an excess demand for a commodity in the market?

What do you mean by the production possibilities of an economy?

How are the total revenue of a firm, market price, and the quantity sold by the firm related to each other?

What is budget line?

Suppose there are two consumers in the market for a good and their demand functions are as follows:

d1(p) = 20 – p for any price less than or equal to 20, and d1(p) = 0 at any price greater than 20.

d2(p) = 30 – 2p for any price less than or equal to 15 and d1(p) = 0 at any price greater than 15.

Find out the market demand function.

Suppose there was a 4 % decrease in the price of a good, and as a result, the expenditure on the good increased by 2 %. What can you say about the elasticity of demand?

From the schedule provided below calculate the total revenue, demand curve and the price elasticity of demand:

What do you mean by ‘monotonic preferences’?

A consumer wants to consume two goods. The prices of the two goods are Rs 4
and Rs 5 respectively. The consumer’s income is Rs 20.
(i) Write down the equation of the budget line.
(ii) How much of good 1 can the consumer consume if she spends her entire
income on that good?
(iii) How much of good 2 can she consume if she spends her entire income on
that good?
(iv) What is the slope of the budget line?
Questions 5, 6 and 7 are related to question 4.

Distinguish between a centrally planned economy and a market economy.

Suppose the demand and supply curve of commodity XX in a perfectly competitive market are given by:

qD =700 - p

qs = 500 + 3p for p ≥ 15

= 0 or 0 ≤ p <15

Assume that the market consists of identical firms. Identify the reason behind the market supply of commodity X being zero at any price less than Rs 15. What will be the equilibrium price for this commodity? At equilibrium, what quantity of X will be produced?

Consider the demand curve D (p) = 10 – 3p. What is the elasticity at price 53?

How will a change in the price of coffee affect the equilibrium price of tea? Explain the effect on equilibrium quantity also through a diagram. 

How are the total revenue of a firm, market price, and the quantity sold by the firm related to each other?